As the number of nations launching pilot projects for central bank digital currencies (CBDCs) rises, South Korea has now joined the group. The Bank of Korea (BOK), the nation’s central bank, is getting ready to start a pilot study to investigate the technical foundation needed for a CBDC.
On October 4th, the BOK, the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS) together announced the CBDC pilot program. This project’s main goal is to determine whether it is feasible to create a future monetary system based on “wholesale CBDCs.”
This pilot initiative will involve the participation of both private banks and public institutions. Additionally, the Bank for International Settlements (BIS) will provide crucial technical support. The BOK intends to conduct tests for both retail and wholesale CBDCs.
In the context of a wholesale CBDC, banks will tokenize their deposits and circulate them within a network overseen by the BOK, the FSC, and the FSS. Live testing for the retail CBDC is expected to commence following the system setup in the fourth quarter of 2024.
It’s important to note that, as is customary with CBDC trials, the pilot program does not necessarily guarantee its implementation. However, Lee Myung-soon, the first deputy governor of the FSS, emphasized that this pilot represents a significant step toward creating a prototype for a future monetary system. He stated:
“The BOK has persistently pursued technological research related to CBDC. This test, building upon past achievements, represents a significant step towards creating a prototype for the future monetary system.”
These remarks align with statements made by Denis Beau, the first deputy governor at Banque de France, on September 3rd. In his address, Beau referred to CBDCs as “the catalyst for improving cross-border payments by enabling the build-up of a new international monetary system.”
South Korea’s initiation of a CBDC pilot underscores the ongoing global exploration of digital currencies and their potential to reshape the future of monetary systems and cross-border transactions.
ALSO READ
- Central Banks of France, Singapore, and Switzerland Test Cross-Border CBDC Payments
- Russia to Test CBDC with 13 Banks in Pilot Program
- Stablecoins and CBDCs to be Used to Connect Asian Countries, Says Japanese Startup